That ECB bailout letter – an update

Back in August economist Karl Whelan pointed to an odd discrepancy in the dates referred to in my requests for information from the ECB in relation to Ireland’s baillout. Notwithstanding the ECB making a series of errors in their releases to me, and notwithstanding the ECB releasing several documents that the Irish Department of Finance had refused to release, there still remains two major, and indeed critical questions:

1) Was there a communication between the ECB and Brian Lenihan on November 12, 2010?
2) If so, what was the content of that communication?

Why you may ask, is this important? Well thestory.ie has spent the past 12 months trying to answer this question. We’ve gone to the ECB repeatedly. We’ve appealed their refusals for access to documents to the ECB President, Mario Draghi. We’ve appealed his refusals to the European Ombudsman. We’ve appealed refusals by the Irish Department of Finance to the Irish Information Commissioner.

The Evening Herald leads with documents obtained by thestory.ie

In every communication, both bodies have denied the existence of any record of a communication on November 12, 2010. But we believe this position to be untenable. Let’s cast our minds back to that week and look through the chronology of events:

Friday, November 12: Bloomberg reports on Irish bailout “Being urged by European policymakers to take emergency aid”. Brian Cowen led denials that weekend. Our contention is that communications took place between Ireland and the ECB on this date. Any record of communication is denied.

Sunday, November 14: Following speculation over the weekend, on The Week in Politics, Justice Minister Dermot Ahern again denied that bailout negotiations were taking place. He said he spoke to Brian Cowen and Brian Lenihan “that morning”.

Tuesday, November 16: Lenihan goes to Brussels for meeting of Finance Ministers. The main issue is Ireland.

Wednesday, November 17: British Chancellor says Britain is willing to lend to Ireland.

Thursday, November 18:Morning Ireland. Patrick Honohan calls RTE and goes on air from Frankfurt. “A loan will be made available, and drawn down as necessary”. He says he did not discuss the call in advance with Cowen or Lenihan. Teams from the IMF, EC, ECB etc were already in Dublin that morning, and “within an hour of the [Honohan] interview, the teams were sitting down in the Irish Central Bank for their first meeting”.

Friday, November 19: Lenihan confirms talks on a bailout are underway. This apparently is when the ECB sent a letter to DoF about a bailout, but how could it be the only substantial communication from the ECB given all that had happened over the previous week?

Monday, November 21: Government formally asks for help.

So on what basis do we believe the critical communications took place on the 12th, and not the 19th as is contended?

1) Brian Lenihan indicated it clearly, personally
2) His advisor Alan Ahearne said the same
3) Journalist Stephen Collins refers to it, having had sight of other leaked documents

Dan O’Brien: “Finance Minister Brian Lenihan has told us, in fact, that he had received a letter from Jean Claude Trichet, the President of the European Central Bank, on the Friday – and so before those government denials. In it, he says, the ECB spelled out its concerns about the amount of money it was owed by Irish banks and suggested that the country should be looking at applying for a bailout.”

Mr Lenihan says in audio:

“Mr Trichet wrote to me, he raised the question about whether Ireland would be participating in a programme at that stage. I rang Mr Trichet after receipt of the letter, but it was clear to me that there was a serious issue for Ireland, and I said it was important we discuss those concerns. And we agreed that on the following Sunday there would be an official level discussion about these issues in Brussels.”

When pushed about the rumours of a bailout over that weekend, Lenihan continued:

“I was in very difficult negotiations, we were simply having exploratory official discussions.”

“Yeah, the letter came in on the Friday from Trichet. The ECB were getting very hostile about the amount of money that it was having to lend to Ireland’s banks. The ECB demanded something be done about it and it mentioned Ireland going into the bailout. They were keen to get Ireland into the programme.”

He added:

“Lenihan rang Trichet that day, and they agreed officials would meet the following day in Brussels. When they met, the ECB put huge pressure on Ireland to go into the programme.”

Ahearne said Lenihan was now at the centre of international chaos and Ireland’s future hung in the balance.

“The following Tuesday, Lenihan went to the eurozone meeting, and I remember him coming back and describing it as a total circus.”

So why would the ECB and the Department of Finance deny records of communications on November 12? And why would an apparently contentious letter be sent after the bailout had been implicitly agreed, surely it would have been sent before?

Would an earlier communication prove that pressure for Ireland to accept a bailout came from the ECB long before the bailout had been implicitly agreed would take place as Patrick Honohan said on radio on November 18?

Is it credible that the ECB made no written communication to the Department of Finance between November 4 and November 18, when ECB officials were already in the Central Bank on Dame Street on November 18?

Is it credible that the ECB sent a contentious letter to Ireland on the 19th as they claim, when ECB officials were already meeting with our Central Bank governor, the IMF and European Commission representatives in Dublin the day before?

(For FOI nerds the issue is the existence, or not, of a record of communication, under Section 10 of the Irish FOI Act)

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2 thoughts on “That ECB bailout letter – an update”

Thanks for this update Gavin and full marks for your patience and dogged commitment to unearthing the truth.We are entitled to have full information as to what happened here—after all we have paid 64 billion to bail out the banks.Cowan should be compelled to tell us the full truth as to what happened under his watch and Martin,current FF leader,who bears collective responsibility for what happened shoul leave no stone unturned to give us the truth if he hopes to have any chance of redeeming his discredited Party.

Irish Times had a report, mentioning the bail out was huge, including overseas loans in Bulgaria etc. Very short period after the release of news, about the need of a bailout by Lenihan. The reporter must have been well informed of the situation.

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